The Underused Housing Tax has been eliminated for 2025 and later years. New section 1.1 provides that “No tax is payable … for 2025 and subsequent calendar years” and new section 6.1 that “a person is not required to file a return … for 2025 and subsequent calendar years”, both added by the Budget 2025 Implementation Act, No. 1, which received royal assent on 26 March 2026. But 2022, 2023 and 2024 remain fully live. The Act is not repealed until 1 January 2035, and Budget 2025 states that all requirements, penalties and interest continue to apply for those years. Minimum failure-to-file penalties are currently $1,000 for an individual and $2,000 for a corporation, reduced from $5,000 and $10,000.
If you filed an Underused Housing Tax return last year, or paid an accountant to tell you that you did not have to, there is news: the tax is gone from 2025 onward.
Two new provisions were added to the Underused Housing Tax Act by the Budget 2025 Implementation Act, No. 1, which received royal assent on 26 March 2026. Section 1.1: “No tax is payable … for 2025 and subsequent calendar years.” Section 6.1: “a person is not required to file a return … for 2025 and subsequent calendar years.”
The Canada Revenue Agency confirms it: affected owners “do not need to file a return or pay the underused housing tax (UHT) for 2025 and subsequent calendar years”.
But 2022, 2023 and 2024 are still live — and this is the part that matters
The Act is not repealed until 1 January 2035. Section 169(1) of the Budget 2025 Implementation Act repeals it; section 169(2) sets that repeal at 1 January 2035. The Act stays on the books for another nine years, which means the CRA keeps its assessment, collection and penalty powers for the 2022 to 2024 years.
Budget 2025 said so directly: “All UHT requirements continue to apply in respect of the 2022 to 2024 calendar years. Penalties and/or interest for failing to file a UHT return as and when required, or for failing to pay UHT when it becomes due, will also continue to apply.”
So the practical question is no longer “do I file this year?” It is “did I file for 2022, 2023 and 2024, and if not, what is the exposure?”
The penalties, and the reduction people missed
| Failure to file | Original minimum | Current minimum |
|---|---|---|
| Individual | $5,000 | $1,000 |
| Corporation | $10,000 | $2,000 |
The original figures are visible in the archived text of section 47, headed “Version of section 47 from 2022-12-15 to 2024-06-19”. The reduction came from S.C. 2024, c. 17, s. 141.
One thing I could not resolve. Which filing years the reduced minimums apply to is not stated in a related-provisions note covering the dollar figures — the only such note governs a different subsection. I am not going to assert a year. If you have an unfiled return for 2022 to 2024, both figures are on the table and that is a question for your accountant with the citation in hand.
What the tax actually was
For the years still live: section 6(3) imposed the tax on every person who, on 31 December of a calendar year, was an owner of a residential property other than an excluded owner, at 1 per cent of the taxable value (or elected fair market value) multiplied by the ownership percentage.
The filing trap was always that the obligation to file was much wider than the obligation to pay. An “affected owner” who owed nothing still had to file. The 2023 amendments moved most ordinary Canadians into the “excluded owner” category — but not those holding through a corporation, a partnership or a trust, which is exactly the structure a great many Ontario investment properties sit in.
If you hold a rental property through a corporation or a family trust, you were an affected owner for 2022 to 2024 and you had a filing obligation even with no tax to pay. That obligation has not gone away retroactively. It has only stopped applying going forward.
A stale-source warning
Two official pages are behind. The CRA’s main underused housing tax hub, last modified in April 2025, does not mention the elimination. And the CRA notice that does confirm it, UHTN16, carries an internal date inconsistency — the notice line and the footer both read March 2024, while the body describes a royal assent on 26 March 2026. The content is right; the date stamp on the page is not. I have flagged it rather than quietly relying on it.
What to do
- Stop planning to file for 2025 and later. The statute says you do not have to.
- Check 2022, 2023 and 2024. Especially if you hold through a corporation, partnership or trust.
- If a return is missing, get advice on the penalty exposure with both the $5,000/$10,000 and $1,000/$2,000 figures in front of you.
- Do not assume the Act is dead. It stands until 1 January 2035 precisely so the historical years can be enforced.
Hold a rental property through a corporation or a family trust?
Then you were almost certainly an affected owner for 2022 to 2024 with a filing obligation even if you owed nothing, and that obligation did not disappear when the tax did. If you are not sure whether those returns were filed, it is worth finding out now rather than when a notice arrives — the Act stays on the books until 2035 specifically so those years can be enforced. I am not an accountant and this is a question for yours; I am flagging it because a lot of people have understandably read “the tax is gone” and stopped there.
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Frequently asked questions
Do I still have to file an Underused Housing Tax return?
Not for 2025 or later years. Section 6.1 of the Underused Housing Tax Act, added by the Budget 2025 Implementation Act, No. 1, provides that despite sections 7 and 10 a person is not required to file a return for a residential property for 2025 and subsequent calendar years, and section 1.1 provides that no tax is payable for those years. The Canada Revenue Agency confirms that affected owners do not need to file a return or pay the tax for 2025 and subsequent calendar years.
Is the Underused Housing Tax Act repealed?
Not yet. Section 169(1) of the Budget 2025 Implementation Act, No. 1 repeals the Act, but section 169(2) provides that the repeal comes into force on 1 January 2035. The Act therefore remains on the books for another nine years, which preserves the Canada Revenue Agency’s assessment, collection and penalty powers in respect of the 2022 to 2024 calendar years.
Do I still owe anything for 2022, 2023 or 2024?
Possibly, and those years are unaffected by the elimination. Budget 2025 states that all requirements continue to apply in respect of the 2022 to 2024 calendar years, and that penalties and interest for failing to file a return as and when required, or for failing to pay when due, also continue to apply. The Canada Revenue Agency’s own notice repeats that the requirement to file and pay still applies to the 2022, 2023 and 2024 calendar years.
What were the penalties for failing to file?
Section 47(1)(a) currently sets minimum penalties of $1,000 for an individual and $2,000 for a corporation. The original figures were $5,000 and $10,000, visible in the archived version of section 47 covering 15 December 2022 to 19 June 2024, and were reduced by S.C. 2024, c. 17, s. 141. Which filing years the reduced minimums apply to is not resolved by any related-provisions note covering the dollar figures, so anyone with an unfiled return should take advice with both sets of figures in hand.
Who had to file even though they owed nothing?
Affected owners, as opposed to excluded owners. The obligation to file was always wider than the obligation to pay: an affected owner with no tax payable still had to file a return. Amendments in 2023 moved most ordinary Canadian individual owners into the excluded owner category, but ownership through a corporation, a partnership or a trust generally did not qualify for that exclusion — which is the structure a great many Ontario investment properties are held in.
What was the rate of the tax?
One per cent. Subsection 6(3) imposed the tax on every person who, on 31 December of a calendar year, was an owner of a residential property other than an excluded owner, calculated as one per cent multiplied by either the taxable value or, where an election was filed, the fair market value, multiplied by the ownership percentage.
Related reading
- The foreign buyer ban: what it actually catches
- Bare trusts and T3 reporting: where it stands now
- Turning your home into a rental: the section 45(2) election
- Renting out property as a non-resident: the 25% trap
Sources
Every figure on this page traces to one of these, and each was read on 1 September 2026. Primary sources only — statute, regulation, and the government or agency that administers the rule. Where I could not verify something from a primary source, the page says so instead of guessing.
- Underused Housing Tax Act, S.C. 2022, c. 5, s. 10. Justice Laws Website, current to 21 June 2026 and last amended 26 March 2026. New section 1.1 provides that no tax is payable for 2025 and subsequent calendar years, and new section 6.1 that a person is not required to file a return for 2025 and subsequent calendar years, both added by S.C. 2026, c. 3. Section 6(3) sets the tax at one per cent of the taxable value or elected fair market value multiplied by the ownership percentage. Section 47(1)(a) sets the current minimum penalties at $1,000 for an individual and $2,000 for a corporation. Accessed 1 September 2026.
- Budget 2025 Implementation Act, No. 1, S.C. 2026, c. 3. Justice Laws Website, current to 21 June 2026 and last amended 14 June 2026. Sections 167 and 168 eliminate the underused housing tax and the filing requirement for 2025 and subsequent years. Section 169(1) repeals the Underused Housing Tax Act, and section 169(2) provides that the repeal comes into force on 1 January 2035, so the Act stays on the books until then. Section 90(2) enacts the new Income Tax Act subsection 215(1.2) relieving residential tenants of the requirement to withhold, deemed in force 12 August 2024. Accessed 1 September 2026.
- Budget 2025, tax measures supplementary information — Government of Canada. Government of Canada, 4 November 2025. States that Budget 2025 proposes to eliminate the underused housing tax as of the 2025 calendar year, that no tax would be payable and no returns required for 2025 and subsequent years, and that all requirements continue to apply in respect of the 2022 to 2024 calendar years, including penalties and interest for failing to file or pay. Accessed 1 September 2026.
- UHTN16, Proposed amendments to the Underused Housing Tax — Canada Revenue Agency. Canada Revenue Agency. Confirms that on 26 March 2026 the Budget 2025 Implementation Act, No. 1 received royal assent, that affected owners do not need to file a return or pay the tax for 2025 and subsequent calendar years, and that the requirement to file and pay still applies to the 2022, 2023 and 2024 calendar years. Note a date inconsistency on the page itself: the notice line reads March 2024 and the footer date modified reads 8 March 2024, although the content describes a March 2026 royal assent. Accessed 1 September 2026.
About the author — Jatin Dua, Broker of Record
I’m the Broker of Record at RE/MAX Quantum Realty, 799 The Queensway in Etobicoke. I am not an accountant, a tax lawyer or an immigration lawyer, and nothing on this page is advice about your own position. Anything that turns on your residency, your corporate structure or your filing history goes to a professional who can see the whole picture.
What I can do is read the statute and the Canada Revenue Agency’s own material and quote them accurately, with the section number and the date the source carries. Tax rules in this area change fast and a great deal of what circulates online is describing law that has since been amended, deferred or repealed. Where that is the case, the page says so. connect@jatindua.com or 437-987-1925.